System and method for salvage calculation, fraud prevention and insurance adjustment

ABSTRACT

Disclosed is a novel system and method that provides real time information to an insurance adjuster. The system obtains information related to an insured item which has an outstanding claim. Information includes the cost to repair a specific item, the salvage value of the item, and the cost to replace the item. The system then compares the information related to the insured item from an economic perspective to determine whether it should be repaired or replaced. Since the system is objective, it reduces the reliance on subjective human factors such as collusion and lack of expertise. As a result, the system reduces the number of fraudulent and inaccurate transactions related to the specific item.

FIELD OF THE INVENTION

The present invention generally relates to the field of insurance. Morespecifically, the present invention relates to an improved system andmethod for determining the salvage value of items covered by a homeinsurance policy. In addition, the present invention relates to thereduction and prevention of fraudulent claims associated with itemscovered by a home insurance policy.

BACKGROUND OF THE INVENTION

Home insurance, or homeowners insurance, is an insurance policy thatcombines various personal insurance protections which include lossesoccurring to one's home and its contents. Further, homeowners insuranceprotects against the loss of the use of a home and loss of otherpersonal possessions of the homeowner, as well as liability insurancefor accidents that may happen at the home.

The cost of homeowners insurance often depends on what it would cost toreplace the house and which additional riders (i.e., optional benefitsindicating additional items to be insured) are attached to the policy.The insurance policy itself is a lengthy contract, and discloses whatwill and what will not be paid in the case of various events. Typically,claims due to earthquakes, floods, acts of God, or war are excluded.

The home insurance policy is usually a term contract (i.e., a contractthat is in effect for a fixed period of time). In addition, insurancecompanies offer perpetual insurance (i.e., home insurance without afixed term). The payment the insured makes to the insurer is called thepremium, which must be paid each term. Most insurers charge a lowerpremium if it appears less likely the home will be damaged or destroyed.For example, if the house is situated next to a fire station, or if thehouse is equipped with fire sprinklers and fire alarms the correspondingpremium will be lower than normal.

Generally, there are six standardized homeowners insurance forms ingeneral and consistent use. The standardized forms are described below:

Homeowners Form 1 (“HO-1”) is a limited policy that offers varyingdegrees of coverage for items specifically outlined in the policy. Forexample, this policy can be used to cover a valuable object found in thehome, such as a painting.

Homeowners Form 2 (“HO-2”) is similar to HO-1 in that it is a limitedpolicy. However, a HO-2 policy covers specific portions of a houseagainst damage. The coverage is usually a “named perils” policy, listingthe events that are covered.

Homeowners Form 3 (“HO-3”) is the most common policy for a homeowner. Itis designed to cover all aspects of the home, structure and it contentsas well as any liability that may arise from daily use as well as anyvisitors who may encounter accident or injury on the premises. Coveredaspects as well as limits of liability are clearly spelled out in thepolicy to insure proper coverage.

Homeowners Form 4 (“HO-4”) is commonly referred to as renters insurance.This policy covers those aspects of the apartment and its contents. Thispolicy can also cover liabilities arising from accidents and intentionalinjuries for guests.

Homeowners Form 5 (“HO-5”) covers a home, the homeowner, and itspossessions as well as any liability that might arise from visitors orpassers-by. This coverage is different from HO-3 in that it covers awider breadth and depth of incidents and losses than an HO-3.

Homeowners Form 6 (“HO-6”) is a form of supplemental homeowner'sinsurance known as condominium coverage. It includes coverage for thepart of the building owned by the insured and for the property housedtherein of the insured. It is designed to span the gap between what thehomeowner's association might cover in a blanket policy written for anentire neighborhood and those items of importance to the insured.Typically the HO-6 covers liability for residents and guests of theinsured in addition to personal property. The liability coverage,depending on the underwriter, premium paid, and other factors of thepolicy, can cover incidents up to 150′ from the insured property, allvaluables within the home from theft, fire or water damage or otherforms of loss.

The insurance company is liable for any damage incurred to any propertycovered by any of the aforementioned policies. To determine the amountof damage to a property, the insurance company sends an authorizedrepresentative, usually an insurance adjuster. The adjuster takes aninventory of the damaged items and assesses the overall damage to theproperty. However, because insurance adjusters are not experts inproperty remediation, a third party remediation firm, such as SERVPRO®remediation services, SERVICEMASTER CLEAN® remediation services, orRAINBOW INTERNATIONAL® remediation services, is hired to help assess thedamage. In addition, insurance adjusters are not available in all areas.As a result, insurance companies or insured's may hire one or more ofthese remediation companies directly.

Remediation firms assess which items can be restored, which items can berepaired, and which items must be replaced. The decision is made by theremediation company and supervised by an insurance company adjuster (ifassigned). However, determining the cost to replace a particular item isnot easily determined. It is also difficult to estimate the final costto repair the item at the site of the loss since the people involved maynot be educated on contractual pricing and other insurance related costmatters. Further, because storage time and cost is variable, and isbilled to insurance companies on a “cost plus” basis, it is difficult todetermine an accurate price of repairing an item. Also, even if itemsare restored, they may not be accepted by the claimant/insured, whichresults in the insurance company paying twice: once to the remediationcompany for its services, and once to the claimant/insured to replacethe same item.

Importantly, the interest of the remediation firm is directly opposed tothat of the insurance company; the remediation firm has an interest insalvaging as many items as possible, and storing them as long aspossible to maximize revenue. As a result, there is no reliable,accurate cost benefit analysis performed on these items to determinewhether it is in the best interest of the insured to repair or replace aparticular item.

Further, because the interests of the insurance company and theremediation firm are opposed, there is a possibility that theremediation firm will fraudulently determine that a particular itemneeds repair. In addition, remediation companies often subcontractrepair work on items to friends and other preferred partners. Currently,there is no control or documentation over why a particular item was sentto a particular remediation firm. A corrupt individual could team upwith a remediation firm to send an excessive amount of items to berestored without regard as to whether it is a good decision.

There are several systems which aid insurance companies in determiningthe scope and payment of incurred claims. For instance, many insurancecompanies utilize a communications network for processing insuranceclaims for vehicles and other items with parts. It consists of a networkcontaining claim terminals and repair terminals. Identification data,which may include electronic images and other related information, isinputted into claim terminals and sent to repair terminals. Informationrelated to costs associated with repair and replacement is returned tothe claim terminal where the results can be compared. However, thissystem is focused on automobile insurance and is driven by its role as acommunication platform to share digitalized photographs of damaged partsproviding real-time connection between the claim handler and the bodyshop and/or parts supplier. In addition, the system does not aid indetermining the salvage value of replaceable parts, nor does it preventfraudulent transactions from occurring.

In addition, Allstate® currently utilizes a remote contents estimatingsystem. The system is an Internet-based system for providing an estimateof the cost of settling an insurance claim. Inventory informationsubject to the claim is collected and a price data acquirer is used toobtain prices for replacing the inventory items from a price database orsimilar source. The system is meant to be a comprehensive method ofresolving the entire claim and provides a means for absorbingsupplemental information into the original recommended settlement andgenerating a new updated version. The system incorporates policy limitinformation and depreciation tables as part of its process for providingan estimate of the claim's resolution costs. The system considersmultiple options for each item in the claim (including repair and/orcleaning costs, replacement costs, RCV/ACV, and replacement allowances)and recommends a specific solution while arriving at the estimated totalclaim cost.

However, there are several drawbacks associated with this system. Forexample, the system utilizes historical price data as a basis; it doesnot utilize real-time data. As a result, the values determined by thissystem can be erroneous. In addition, it is macro based. That is, itfocuses on the claim in its entirety rather than specific, questionableitems. In addition, this system does not take into account customerrejections (i.e., redundancy) or the salvage value of some items.

In light of the foregoing, there exists a clear need in the art for asystem and method for the real time determination of the salvage valueof items covered by a home insurance policy. In addition, there is aclear need for a system which monitors and reduces the proliferation offraudulent claims associated with items covered by a home insurancepolicy.

SUMMARY OF THE INVENTION

The present invention aids an insurance adjuster in making decisionsconcerning covered property contents or real estate structures damagedin a loss and whether it is more effective to replace or repair aspecific item. Many considerations go into this decision, includingstorage costs, whether the repaired item will be accepted by the insuredand recoverable salvage value. The present invention utilizes a realtime search engine to acquire the most current replacement costs for anitem and compares it to the total associated costs of repairing the itemalong with any potential salvage values. Historical results regardinginsured acceptance of repaired items are gathered and stored in adatabase to provide guidance as to the tendencies of certain items orproducts to be rejected by insured. A similar database details thehistorical salvage potential of specific items. This assists theadjuster and reduces the proliferation of “double pays.” It also exertsan important control in the adjusting process, reducing the frequency orlikelihood of fraud.

For example, a user can perform a query of an insure item with anoutstanding claim, such as a 27″ TV. In response to the query, itdetermines the cost to repair it, taking into account storage costs, thetime value of money, and other factors to calculate a total remediationcost. The same query is directed to a database containing replacementcost values to determine the cost to replace the content item, takinginto account the salvage amount that could be received if an item wasreplaced or not repaired.

The two points of data are then compared to determine if an item shouldbe repaired, restored, or replaced, and can be used to better documentthe claim. In addition, the system is able to store historicaltransactions, thereby “tracking” the items, enabling a user to determinetrends with particular content items that are most frequently rejectedby the insured/claimant after a remediation attempt.

Accordingly, an object of the present invention is to provide a systemthat determines whether to repair or replace an insured item.

Still another object of the present invention is to provide a systemthat provides improved customer service to insured/claimant.

Another object of the present invention is to provide a system thatreduces the amount of “double pay” situations.

Still another object of the present invention is to provide a systemthat reduces the amount of claim handler resources (i.e., restored itemsnot accepted by claimant/insured is time consuming).

Yet another object of the present invention is to provide a system andmethod for reducing fraudulent insurance claims.

Yet another object of the present invention is to provide a system andmethod for detecting fraudulent insurance transactions.

Another object of the present invention is to provide a system andmethod for tracking the salvage value of an insured item.

Another object of the present invention is to provide a system andmethod for improved claim file documentation.

BRIEF DESCRIPTION OF THE DRAWINGS

A further understanding of the present invention can be obtained byreference to a preferred embodiment set forth in the illustrations ofthe accompanying drawings. Although the illustrated embodiment is merelyexemplary of systems for carrying out the present invention, both theorganization and method of operation of the invention, in general,together with further objectives and advantages thereof, may be moreeasily understood by reference to the drawings and the followingdescription. The drawings are not intended to limit the scope of thisinvention, which is set forth with particularity in the claims asappended or as subsequently amended, but merely to clarify and exemplifythe invention.

For a more complete understanding of the present invention, reference isnow made to the following drawings in which:

FIG. 1 is a schematic block diagram of the architecture used toimplement the system in accordance with the preferred embodiment of thepresent invention;

FIG. 2 is a flow diagram of a routine for accessing the system inaccordance with the preferred embodiment of the present invention;

FIG. 3 is a flow diagram of a method of determining whether to repair orreplace an insured item in accordance with the preferred embodiment ofthe present invention;

FIG. 4 depicts a flow diagram of the method of determining the repaircost of an insured item in accordance with the preferred embodiment ofthe present invention;

FIG. 5 depicts a flow diagram of the method of determining thereplacement cost of an insured item in accordance with the preferredembodiment of the present invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT

A detailed illustrative embodiment of the present invention is disclosedherein. However, techniques, systems and operating structures inaccordance with the present invention may be embodied in a wide varietyof forms and modes, some of which may be quite different form those inthe disclosed embodiment. Consequently, the specific structural andfunctional details disclosed herein are merely representative, yet inthat regard, they are deemed to afford the best embodiment for purposesof disclosure and to provide a basis for the claims herein which definethe scope of the present invention.

Moreover, well known methods, procedures, and substances for bothcarrying out the objectives of the present invention and illustratingthe preferred embodiment are incorporated herein but have not beendescribed in detail as not to unnecessarily obscure novel aspects of thepresent invention.

None of the terms used herein, including “item”, “insured property”,“property”, “insured item”, and the like are meant to limit theapplication of the invention. The terms are used interchangeably forconvenience and are not intended to limit the scope of the invention.Similarly, the use of the term “insurer”, “individual”, “purchaser”, and“corporation” is not meant to limit the scope of the invention to onetype of entity, as any entity or individual can also utilize the presentinvention. The following presents a detailed description of a preferredembodiment of the present invention.

Referring to the drawings wherein like numerals indicate like elementsthroughout, FIG. 1 is a schematic block diagram of the architecture usedto implement the present system in accordance with one embodiment of thepresent invention. Tuner/receiver 100 receives data signals from one ormore repair cost data sources 101. For example, tuner/receiver 100 mayreceive data from a remote location, such as an insured's home.Alternatively, tuner/receiver 100 may receive data from a corporation,an educational institution or a wireless device. Exemplary wirelessdevices include a cellular telephone, a portable digital assistant, adigital media storage device, a digital media playback device, a digitalmedia transmitting device, a digital media receiving device, an iPod®,and a blackberry®. However, any wireless device can be utilized inaccordance with the present invention.

The transmission of data itself may comprise DTV, DVB, or analogsignals, as well as any other transmission signal used for sendinginformation. Information comprises anything related to the repair costof a particular item. In addition, in the preferred embodiment,information pertaining to a particular item has data related to itsgeographical location, its brand name, and similarly price items.Further, information can comprise information related toconsumer-generated or consumer-derived media, such as Internetdiscussion boards, groups, and forums, chat rooms, Internet newsgroups,web logs (blogs), personal websites, consumer ratings websites andforums, and any other public opinion, public consensus, or relatedinformation.

Similarly, tuner/receiver 102 may receive replacement cost data 103 viaany transmission mechanism, including high speed optical fiber andsatellite links. Tuner/receiver 104 may receive various forms ofinformation from other data sources 105, including customer preferences,salvage value, and frequency of repaired item acceptance. Of course, asis known in the art, any information related to the insured item can beprovided by any of these sources or any other source. As is common inthe art, tuners/receivers 100, 102, and 104 may output the informationto data processing node 112. Data processing node 112 may comprise anyform of data processing, including digitizing, filtering, or any otherknown data processing function. Data processing node 112 outputsprocessed data 120 to indexing and reporting node 126.

Data processing node 112 may also comprise other processing modules toextract information from other sources. For example, data processingnode 112 may comprise may comprise OCR software to extract informationfrom print sources.

The system of the present invention can also receive data from sourcessuch as the Internet, other third parties, print media, etc. In theembodiment depicted in FIG. 1, this data is received by network accessnode 130 from Internet VPN 132 and stored data 134. Network access node130 may also access a broad array of external data. Stored data 134 maybe maintained by any third-party. For example, stored data 134 maycomprise market or product data, academic data from other institutions,users or teachers, and other stored analyses and product information.Stored data 134 may additionally comprise search or keyword criteria andvarious forms of comparison data. Internet/VPN 132 may be a source ofcontinuous Internet media, such as web logs (blogs), forums, chat rooms,newsgroups, electronic bulletin boards, etc., which all may be accessedby the system of the present invention.

In the preferred embodiment, network access node 130 compriseshigh-speed fiber optic OC-3 data link 131 to Internet/VPN 132 and storeddata 134, but any network access mechanism exhibiting any data transferrate may be utilized, as appropriate. OC-3 data link 131 is preferredbecause it allows for faster transfer of data from Internet VPN 132 andstored data 134. Data received via network access node 130 is screenedby data filter node 136. Data filter node 136 may comprise a packetfilter, firewall, or other network filtering device that processesincoming network data from the network access stream. Data filter node136 and network access node 130 may optionally be integrated withinindexing and reporting node 126.

Indexing and reporting node 126 analyzes all incoming data streams forrelevant information. Indexing and reporting node 126 may additionallyutilize data from various other sources. Relevant information may beindexed, catalogued, or stored within indexing and reporting node 126 ornetwork storage 142. Due to the potentially voluminous size of thecaptured data, well-known video and data compression schemes aretypically implemented. Indexing and reporting node 126 may also generatevarious related reports and analyses pertaining to the captured data.

In the preferred embodiment of the present invention, data sources 101,103, and 105 are continually monitored and processed 112 in real time.As a result, data stored in network storage 142 is continuously updatedto reflect the most current data related to repair costs, replacementcosts, and other costs.

The present invention utilizes the above described architecture for aspecific platform directed to performing a query as illustrated in FIG.2. The query interface 200 consists of a number of fields pertaining toan insured item, including make, model number, age, and condition. Inthe preferred embodiment, the query interface operates with a pluralityof searchable fields that can be searched with Boolean expressions as isknown in the art.

To access the query interface, a user accesses the network at networkaccess stage 210. This typically involves establishing a connection tothe system of the present invention via a public network connection(e.g., the Internet), or via private network access (e.g., via VPN). Foradditional security, this connection may be encrypted or secure. A useraccessing the system is authorized at authorization stage 212. This stepmay comprise the submission of a username and password combination orany other conditional access technique common in the art. Users may alsoestablish “guest” accounts to allow others limited access to the system.

If the user is not presently authorized, and is not a guest, the usermay subscribe to the service at subscription input 214. Aftersubscription input 214 is submitted, the present invention may determineif access to the service is now desired at access desired stage 216. Ifaccess to the service is not desired, the system returns the user to thecalling system or web page at return stage 218. If access is desired,stage 216 returns a user to authorization stage 212 so that the user maylogin to the service.

After a user successfully logs into the system, the user can accessquery interface 200. Although the MICROSOFT INTERNET EXPLORER webbrowser is the preferred medium for the interface, any other media knownin the art are available for allowing user access to the system such as,but not limited to AOL BROWSER web browser, the FIREFOX web browser, theNETSCAPE web browser, MOZILLA web browser, OPERA web browser, and thelike.

FIG. 3 depicts the flow diagram of a method of determining whether torepair or replace an insured item in accordance with the preferredembodiment of the present invention. Initially, a user enters a queryfrom a remote location (not shown) discussed in greater detail below.The query pertains to a particular item which is insured and has anoutstanding claim. In response, the system acquires data related to thecosts to repair the insured item and acquires data related to the coststo replace the insured item as depicted by 301 and 303, respectively.

More specifically, in response to a query from a user, the systemsearches the appropriate databases, accesses the information, anddownloads it to a node for processing (not shown). In the preferredembodiment, the data acquired represents current, real time repair costsand replacement costs. The processing node determines both the cost torepair the insured item 310 and the cost to replace the item 320, eachof which is described in greater detail with reference to FIGS. 4-5below.

FIG. 4 is a flow diagram depicting the method of determining the repaircost 310 of an insured item in accordance with the preferred embodimentof the present invention. To determine the cost to repair a particularitem, a user first enters a query into query interface 200 as depictedby 401. In the preferred embodiment, the query entry comprises a seriesof Boolean terms. Alternatively, query interface 200 comprises a seriesof drop down boxes as is known in the art. Of course, any other queryinterface can be used in accordance with the present invention.

In response to the data entered of inputted query 401, the systemaccesses a series of databases with information pertaining to the itemqueried. In this example, the query directs the system to accesscustomer preferences data as depicted by 403, access repair cost data asdepicted by 405, and access other factors data as depicted by 407. Thedata is gathered and stored in a manner as previously discussed withregards to FIG. 1.

After accessing the various data sources 403-407, the system filters thedata. In this example, only repair cost data is filtered as depicted by409. However, any other source of data can be filtered (not shown). Thedata is filtered utilizing specific terms as inputted by the query. Forexample, a user can query for a new television and refine the analysisby adding terms related to its age, its geographic location, or itsbrand name. The system utilizes those terms to refine the accessed data.The refined data is then sorted by relevancy and stored in a temporarydatabase.

After filtering the relevant data, it is used to determine a particularcharacteristic for a given insured item. In this example, the systemdetermines an appropriate factor related to customer preferences asdepicted by 411, determines the preliminary repair cost as depicted by415, and determines other costs as depicted by 413.

In this example, determined repair cost data 415 comprises informationrelated to the repair cost for a particular queried item. For example,the cost to repair a particular item with the queried characteristicscan be directly retrieved from the filtered data stored in the temporarydatabase. The system then compares the data and ranks the alternatives.In the preferred embodiment, the system ranks the alternatives fromcheapest to most expensive. Of course, any ranking system can beutilized in accordance with the preferred embodiment. For example, auser can input the query information: “used” “27” Sony Trinitrontelevision”, “expected to take 3 weeks to repair” “at or near Hartford,Conn.” In response, the system accesses data related to the repair costof televisions and filters the data accordingly, storing the mostrelevant results in a temporary database.

The system then determines whether there is data related to other costsof the particular queried item as depicted by 417. If data is available,it modifies the preliminary cost as depicted by 419 by applyingpreviously determined other costs 413.

In this example, determined other costs data 413 comprises informationrelated to the additional costs incurred for a particular queried item.For example, the additional costs can be calculated based on theanticipated repair time. More specifically, the anticipated repair timecan be utilized to determine additional storage costs and a net presentvalue factor to account for the time-value of money. In addition, otherinformation can be included, such as shipping costs for a particularitem.

In this example, the system modifies the repair cost by adding shippingcosts, storage costs, and any other associated costs. Then the systemmultiplies the costs by the net present value factor to account for thetime value of money. This can be represented by the equation:

(∑Ci) ⋅ NPVwhere C_(i)=a cost associated with an itemand NPV=the Net Present Value Factor.

If the system does not have data related to other costs, it determineswhether data is available for customer service. If it is available, thesystem modifies the cost by applying the appropriate factor as depictedby 421.

In this example, determined customer preferences data factor 411comprises information related to the frequency with which a customerrejects or accepts a particular queried item. For example, the systemcan determine that a customer with an item matching the queryinformation: “used” “27” Sony Trinitron television”, “expected to take 3weeks to repair” “at or near Hartford, Conn.” accepts the particularitem with a particular probability. The factor can be measured throughobservation and entered into the appropriate database, statisticallyderived by the system itself, or entered manually by a user into thedatabase or query.

In this example, the system modifies the total repair cost bymultiplying the costs by the appropriate factor. This can be representedby the equation:

[(∑Ci) ⋅ NPV] ⋅ Fwhere C_(i)=a cost associated with an itemNPV=the Net Present Value Factorand F=Customer Service Factor.

Alternatively, a user can instruct the system to not take other costsand customer service into consideration when the query is inputted 401.In this manner, a user can determine the cost simply to repair the item.Then, the user can perform a second query allowing other costs andcustomer service to be accounted for. In this manner, a user can obtainsegmented data which can be statistically analyzed.

For example, a user can run a query and determine that the cost torepair an item is $100 without taking into consideration other factors.However, when customer service and/or other costs are considered, thetotal price is $500. As a result, the user can readily determine thatcustomer service and other costs account for approximately 80% of thecost to repair the particular item. This allows the user to identifypotential inefficiencies in its overall repair policy.

After modifying the preliminary cost 415 by any appropriate cost, thecomputer determines the final cost and stores it in a temporary databasefor analysis as described below with regard to FIG. 3.

FIG. 5 is a flow diagram depicting the method of determining thereplacement cost of an insured item in accordance with the preferredembodiment of the present invention. Similar to determining the repaircost of a particular item, a user first enters a query into queryinterface 200 as depicted by 401. As previously discussed, in thepreferred embodiment, the query entry comprises a series of Booleanterms. Alternatively, query interface 200 comprises a series of dropdown boxes as is known in the art. Of course, any other query interfacecan be used in accordance with the present invention.

In response to the data entered of inputted query 401, the systemaccesses a series of databases with information pertaining to the itemqueried. In this example, the query directs the system to access salvageprice data as depicted by 503, access replacement cost data as depictedby 505, and access other factors data as depicted by 507. The data isgathered and stored in a manner as previously discussed with regards toFIG. 1.

After accessing the various data sources 503-507, the system filters thedata. In this example, only replacement cost data is filtered asdepicted by 509. However, any other source of data can be filtered (notshown). The data is filtered utilizing specific terms as inputted by thequery. For example, a user can query for a new television and refine theanalysis by adding terms related to its age, its geographic location, orits brand name. The system utilizes those terms to refine the accesseddata. The refined data is then sorted by relevancy and stored in atemporary database.

After filtering the relevant data, the data is used to determine aparticular characteristic for a given insured item. In this example, thesystem determines the salvage value as depicted by 511, determines thepreliminary replacement cost as depicted by 515, and determines othercosts as depicted by 513.

In this example, determined replacement cost data 515 comprisesinformation related to the repair cost for a particular queried item.For example, the cost to repair a particular item with the queriedcharacteristics can be directly retrieved from the filtered data storedin the temporary database. The system then compares the data and ranksthe alternatives. In the preferred embodiment, the system ranks thealternatives from cheapest to most expensive. Of course, any rankingsystem can be utilized in accordance with the preferred embodiment. Forexample, a user can input the query information: “used” “27” SonyTrinitron television”, “expected to take 3 weeks to repair” “at or nearHartford, Conn.” In response, the system accesses data related to therepair cost of televisions and filters the data accordingly, storing themost relevant results in a temporary database.

The system then determines whether there is data related to other costsof the particular queried item as depicted by 517. If data is available,it modifies the preliminary cost as depicted by 519 by applyingpreviously determined other costs 513.

In this example, determined other costs data 513 comprises informationrelated to the additional costs incurred for a particular queried item.For example, shipping costs, delivery costs, and order processing costsfor a particular item can be included.

In this example, the system modifies the repair cost by adding the otherassociated costs. Then the system multiplies the costs by the netpresent value factor to account for the time value of money. This can berepresented by the equation:

(∑Ci) ⋅ NPVwhere C_(i)=a cost associated with an itemand NPV=the Net Present Value Factor.

If the system does not have data related to other costs, it determineswhether data is available related to the salvage value of a particularitem. If it is available, the system modifies the cost by subtractingthe salvage value 521.

In this example, determined salvage value 411 comprises related to therepair cost for a particular queried item. For example, the cost torepair a particular item with the queried characteristics can bedirectly retrieved from the filtered data stored in the temporarydatabase. The system then compares the data and ranks the alternatives.In the preferred embodiment, the system ranks the alternatives from mostexpensive to cheapest.

In this example, the system modifies the total replacement cost bysubtracting the appropriate salvage value. This can be represented bythe equation:

[(∑Ci) ⋅ NPV] − Cswhere C_(i)=a cost associated with an itemNPV=the Net Present Value Factorand C_(s)=Salvage Value.

Alternatively, a user can instruct the system to not take other costsand salvage value into consideration when the query is inputted 401. Inthis manner, a user can determine the cost simply to replace the item.Then, the user can perform a second query allowing other costs andsalvage value to be accounted for.

For example, a user can run a query and determine that the cost toreplace an item is $100 without taking into consideration other factors.However, when other costs are considered, the total price is $500.Further, it can be determined that the salvage value is 75$. As aresult, the user can readily determine that other costs account forapproximately 80% of the cost to replace the particular item, which isonly partially offset by the salvage value of the item. This allows theuser to identify potential inefficiencies in its overall replacementpolicy.

Similarly, the system allows a user to monitor for potentiallyinefficient and/or fraudulent claims by eliminating subjective factorssuch as collusion and/or nepotism. For example, a user can determinethat the cheapest alternative (based on inputted query 401) to repair anitem is from “Company X.” However, if the remediation company suggests“Company Y” on a recurring basis, and the remediation frequentlysuggests the use of “Company Y,” the user can identify a potentialinefficiency and investigate further.

In addition, the present invention reduces the number of instances ofimproper remediation by a remediation company. Typically, after a claimis made, a remediation company gathers up as many articles as it can inorder to repair them without performing any analysis as to whether theitem should be repaired because it is in its best interest to do so(i.e., the remediation company will get paid for every item it repairs,regardless of whether it should be). However, the present inventioncurtails this practice by reducing the number of inaccurately repaireditems, reducing the overall costs associated with replacing and/orrepairing items.

After modifying the preliminary cost 515 by any appropriate cost, thecomputer determines the final cost and stores it in a temporary databasefor analysis as described below.

After determining the repair cost 310 and determining the replacementcost 320 in the manner described, the processing node compares the costof each alternative as depicted by 330. Any means of comparison can beutilized, however, in the preferred embodiment, the processing nodecompares the overall cost to repair the item with the overall cost toreplace the item. After comparing the costs of each alternative 330, theprocessing node chooses the most cost effective alternative (i.e., thecheaper alternative).

The results of the comparison are electronically sent to query interface200 and displayed to the user as depicted by 340. In the preferredembodiment, the display is simply a message such as “repair item atlocation X” or “replace item by purchasing item from location Y.”However, any display which reports the results of the comparison can beutilized in accordance with the present invention. For example, queryinterface 200 can display the results of the 10 cheapest repair optionsalong with the results with the 10 cheapest replacement options. It iscontemplated that any other method of displaying the results of thecomparison can be utilized in accordance with the present invention.

1. A computer-implemented method for determining whether to repair orreplace an insured item insured under a homeowners insurance policy, thehomeowners insurance policy insuring against losses to a home andcontents of the home and the loss of use of the home and other personalpossessions of the insured homeowner, issued by an insurer, of aninsured with an outstanding insurance claim, said method comprising thesteps of: receiving by a computer system information relating to thepersonal possession, including make, model and age; acquiring by thecomputer system, employing the received information, information relatedto the repair cost of the personal possession insured under thehomeowners insurance policy, including an estimated cost of repair and aprobability of acceptance by the insured of the personal possession ifrepaired, the probability of acceptance having a value in a range fromzero to one, inclusive; determining by the computer system the repaircost of said personal possession insured under the homeowners insurancepolicy, based on at least the determined estimated cost of repairmultiplied by a factor based on the probability of acceptance, thefactor based on the probability of acceptance having a value of one fora value of the probability of acceptance equal to one, the factor basedon the probability of acceptance having a value of greater than one fora value of the probability of acceptance less than one; acquiring by thecomputer system information related to the replacement cost of saidpersonal possession insured under the homeowners insurance policy,including cost of a replacement for the personal possession and asalvage value of the personal possession; determining by the computersystem the replacement cost of said personal possession insured underthe homeowners insurance policy, based on at least the cost of thereplacement for the personal possession less the salvage value of thepersonal possession; comparing by the computer system said replacementcost of said personal possession to said repair cost of said personalpossession insured under the homeowners insurance policy; and responsiveto determining by the computer system in the comparing that thereplacement cost is greater than the repair cost, determining by thecomputer system that repairing said personal possession insured underthe homeowners insurance policy fulfills an obligation of the insurer tothe insured at lower cost and responsive to determining by the computersystem in the comparing that the repair cost is greater than thereplacement cost, determining by the computer system that replacing saidpersonal possession insured under the homeowners insurance policyfulfills an obligation of the insurer to the insured at lower cost. 2.The method of claim 1, wherein said step of acquiring informationrelated to the repair cost of said personal possession occurs inreal-time.
 3. The method of claim 2, wherein said step of acquiringinformation related to the repair cost of said personal possessionoccurs by utilizing the Internet.
 4. The method of claim 1, wherein saidstep of acquiring information related to the replacement cost of thepersonal possession occurs in real-time.
 5. The method of claim 4,wherein said step of acquiring information related to the replacementcost of the personal possession occurs by utilizing the Internet.
 6. Themethod of claim 1, wherein said step of acquiring the salvage value ofthe personal possession occurs in real-time.
 7. The method of claim 6,wherein said step of acquiring the salvage value of the personalpossession occurs by utilizing the Internet.
 8. A method for determiningwhether to repair or replace an insured item in the nature of a personalpossession kept within a home, insured under a homeowners insurancepolicy, the homeowners insurance policy insuring against losses to ahome and contents of the home and the loss of use of the home and otherpersonal possessions of the insured homeowner, issued by an insurer, ofan insured using a web-based system including a server computer with atleast one database and at least one device connected to the servercomputer via a network, said method comprising the steps of: storing bythe server computer information related to the repair cost of saidpersonal possession insured under the homeowners insurance policy in adatabase, including an estimated cost of repair of the personalpossession and a probability of acceptance by the insured of thepersonal possession if repaired, the probability of acceptance having avalue in a range from zero to one, inclusive; storing by the servercomputer information related to the replacement cost of said personalpossession insured under the homeowners insurance policy, including costof a replacement for the personal possession and a salvage value of thepersonal possession, in a database; receiving a query at the servercomputer, pertaining to said personal possession insured under thehomeowners insurance policy, the query including make, model and age ofthe personal possession; retrieving by the server computer saidinformation related to the repair cost of said personal possessioninsured under the homeowners insurance policy from said database inresponse to said received query; determining by the server computer therepair cost of said personal possession item employing the estimatedcost to repair multiplied by a factor based on the probability ofacceptance by the insured of the personal possession if repaired, thefactor based on the probability of acceptance having a value of one fora value of the probability of acceptance equal to one, the factor basedon the probability of acceptance having a value of greater than one fora value of the probability of acceptance less than one; retrieving bythe server computer said information related to the replacement cost ofsaid personal possession insured under the homeowners insurance policyfrom said database in response to said received query; determining bythe server computer the replacement cost of said personal possessionbased on the cost of the replacement for the personal possession lessthe salvage value of the personal possession; comparing by the servercomputer said determined replacement cost of said personal possessioninsured under the homeowners insurance policy with said determinedrepair cost of said personal possession; and responsive to determiningby the server computer in the the comparing that the replacement cost isgreater than the repair cost, determining that repairing said at leastone personal possession insured under the homeowners insurance policyfulfills an obligation of the insurer under the homeowners insurancepolicy at lower cost and responsive to determining by the servercomputer in the comparing that the repair cost is greater than thereplacement cost, determining that replacing said at least one personalpossession insured under the homeowners insurance policy fulfills anobligation of the insurer under the homeowners insurance policy at lowercost.
 9. The method of claim 8, wherein said information related to therepair cost of said personal possession in a database compriseshistorical data of cost of past repairs of a same or similar item. 10.The method of claim 8, wherein said information related to thereplacement cost of said personal possession in a database compriseshistorical data of cost of a same or similar item.
 11. The method ofclaim 8, further comprising the step of: storing information related tothe salvage value of said personal possession in a database.
 12. Themethod of claim 11, wherein said information related to the salvagevalue of said personal possession in a database comprises historicaldata of past salvage value of a same or similar item.
 13. The method ofclaim 8, further comprising the step of: updating said informationrelated to the repair cost of said personal possession in a database inreal time.
 14. The method of claim 8, further comprising the step of:updating said information related to the replacement cost of saidpersonal possession in a database in real time.
 15. The method of claim8, further comprising the step of: displaying the result of said step ofdetermining whether to repair or replace said personal possession tosaid at least one device.
 16. The method of claim 8, wherein said stepof retrieving said information related to the repair cost of saidpersonal possession from said database in response to said receivedquery occurs in real time.
 17. The method of claim 8, wherein said stepof retrieving said information related to the replacement cost of saidpersonal possession from said database in response to said receivedquery occurs in real time.
 18. The method of claim 1, wherein the stepof determining the repair cost includes modifying the repair cost byadding shipping costs.
 19. The method of claim 18, wherein the step ofmodifying the repair cost further includes adding storage costs.
 20. Themethod of claim 1, further comprising modifying the repair cost to a netpresent value of the repair cost an estimated time to repair thepersonal possession as a duration in determining the net present valueof the repair cost.
 21. A computer system for determining whether torepair or replace an insured item in the nature of a personal possessionmaintained within a home, insured under a homeowners insurance policy,the homeowners insurance policy insuring against losses to a home andcontents of the home and the loss of use of the home and other personalpossessions of the insured homeowner, issued by an insurer, of aninsured with an outstanding insurance claim under the homeownersinsurance policy, comprising: a processor, and one or more databasesaccessible by the processor; the processor being adapted to: access fromthe one or more databases information related to the repair cost of thepersonal possession insured under the homeowners insurance policy,including an estimated cost of repair and a probability of acceptance bythe insured of the personal possession if repaired, the probability ofacceptance having a value in a range from zero to one, inclusive;determine the repair cost of the personal possession insured under ahomeowners insurance policy by multiplying the estimated cost of repairby a factor based on the probability of acceptance by the insured, thefactor based on the probability of acceptance having a value of one fora value of the probability of acceptance equal to one, the factor basedon the probability of acceptance having a value of greater than one fora value of the probability of acceptance less than one; access from theone or more databases information related to the replacement cost of thepersonal possession insured under a homeowners insurance policy,including cost of a replacement for the personal possession and asalvage value of the personal possession; determine the replacement costof said personal possession insured under a homeowners insurance policy,based on at least the cost of the replacement for the personalpossession and the salvage value of the personal possession; comparesaid replacement cost of said personal possession insured under ahomeowners insurance policy to said repair cost of said personalpossession insured under a homeowners insurance policy; and determine,responsive to determining that the repair cost is greater than thereplacement cost, that replacing said at least one personal possessioninsured under the homeowners insurance policy fulfills an obligation ofthe insurer under the homeowners insurance policy at lower cost anddetermine, responsive to determining that the replacement cost isgreater than the repair cost, that repairing the personal possessioninsured under a homeowners insurance policy fulfills an obligation ofthe insurer under the homeowners insurance policy at lower cost.
 22. Thesystem of claim 21, wherein the processor is further adapted to modifythe repair cost by adding shipping costs.
 23. The system of claim 21,wherein the processor is further adapted to modify the repair cost byadding storage costs.
 24. The system of claim 21, wherein the processoris further adapted to modify the repair cost to a net present value ofthe repair cost employing an estimated time to repair the item as aduration in determining the net present value of the repair cost.